Undisclosed Interest in a Liquor License
Fayette Fair Trade v. Perth Amboy | Undisclosed Interest
Notice of Charges from NJ Division of ABC
Have you received a “Notice of Charges” from the New Jersey Division of Alcoholic Beverage Control? If this is the first time you have been charged by the Division of ABC, you are likely concerned and confused by the prospect of having your liquor license suspended. Moreover, if your charges involve allegations of there being an Undisclosed Interest, then you are looking at a presumptive penalty of at least 30 days, if not total revocation. There are numerous cases that have been litigated before the Office of Administrative Law, New Jersey Appellate Division and even the New Jersey Supreme Court. If your liquor license or a liquor license owned by your company is facing charges for having an Undisclosed Interest, you must keep yourself abreast on the case law, statutes and regulations pertaining to these charges. Below is a seminal case in assessing the existence of an Undisclosed Interest under New Jersey ABC regulations and liquor laws.
What is an Undisclosed Interest?
Fayette Fair Trade was a seminal case in New Jersey as it set forth the factors should consider in determining whether or not a person qualifies as an Undisclosed Interest, in violation of N.J.S.A. 33:1-25 and N.J.S.A. 33:1-26. In Fayette Fair Trade, the Appellate Division considered whether a licensee’s employee who runs the day-to-day operations of the licensed premises with little or no oversight from the owner of the corporation licensee and who shares in the licensee’s profits, but is not a shareholder, holds an impermissible undisclosed beneficial interest in the liquor license in violation of N.J.S.A. 33:1-25. The court would go on the affirm the ABC Director’s decision that such conduct constituted an Undisclosed Interest and set forth the following factors for future considerations of what would qualify as a “front” for an Undisclosed Interest:
- A licensee’s lack of knowledge regarding financial affairs of the business;
- Purchase of a license using commingled funds or monies contributed by a spouse or third-party;
- Authorization of a non-licensee to pay bills, sign checks, retain profits;
- Holding oneself out to the public as an owner;
- Authorized to withdraw business funds by non-licensee;
- Licensee’s lack of involvement in and knowledge with the business; and
- Apparent control by an undisclosed party
This list is not exhaustive and only to be used as consideration amongst other facts in a case-by-case basis. Both municipal licensing authorities and courts of law will consider these factors based on Fayette Fair Trade v. Perth Amboy, as well as case law from cases like Florence Meth. Church v. Township of Florence, 38 N.J. Super 85 (App. Div. 1955), when assessing the veracity of allegations for an Undisclosed Interest.
New Jersey ABC Lawyers
If you have been received a Notice of Charges from either the New Jersey Division of Alcoholic Beverage Control or your local municipal ABC board, contact the ABC attorneys at Proetta, Oliver & Fay. William C. Fay, IV, is an experienced liquor law and liquor licensing attorney who has spent part of his career as a Deputy Attorney General with the NJ ABC. Mr. Fay knows exactly how to defend you in these cases because he prosecuted them himself during his time as a Deputy Attorney General. Charges for an Undisclosed Interest are very fact specific and require that you have the expertise of a liquor law attorney to properly represent you against the State. Call (732) 858-5857 today for your consultation.